If you’re thinking about buying your first home, you’re likely also thinking about your first mortgage. Using a mortgage calculator with private mortgage insurance (PMI) is an excellent way for home buyers to make intelligent and informed financial decisions regarding their new loan.
Buying a home is one of the most significant transactions you will make in your lifetime. While record-low mortgage rates are helping first-time buyers enter the market, the budgeting and research associated with obtaining a mortgage can be daunting. Use these best practices to guide you through the process.

What is PMI?

Private mortgage insurance (PMI) protects the lender in case you default on your loan. If your down payment is less than 20%, your lender will likely require you to have PMI. With the average down payment for first-time home buyers at 7%, most first-time homeowners will have to factor PMI into their monthly payments. Typically, PMI costs between 0.5% and 1% of the original loan amount per year. The amount gets bundled into your monthly payment by your lender during the underwriting process.
Not all mortgage calculators account for PMI, but by using one that does, you’ll gain a more accurate estimate of your monthly payments.

Five Ways a Mortgage Calculator with PMI Can Help

Here are a few ways that a mortgage calculator with PMI can help first-time homebuyers:

#1. It Shows How Down Payments Impact Your Loan

A good mortgage calculator will ask you to input your anticipated down payment amount. By playing around with the numbers and entering various down payment percentages, you’ll be able to see how your monthly payment is impacted according to how much you put down. This will help you determine the down payment amount that best suits your budget and financial goals.

#2. It Accounts for Local Taxes and Insurance

Most mortgage calculators will also ask for your location or ZIP code, which allows it to pull in approximate property taxes and homeowner’s insurance costs for your county. Some calculators do not account for these additional items, leaving buyers without a complete picture of their mortgage responsibility.

#3. It Helps You Understand How Much You Can Afford

A mortgage calculator with PMI can establish your home buying budget. If you’ve started your home search and are looking at listings within a specific price range, you’ll know what a monthly mortgage payment might look like at both the high and low end. Having this information is vital when shopping for a home, as you’ll know what you can afford.

#4. It Shows How Important Your Interest Rate is

You’ve probably heard that your interest rate is a crucial component of your mortgage — but do you know how much it impacts what you’ll pay monthly? With a mortgage calculator, you can input various interest rates to see how the payment terms change. Keep all of the other values the same to understand how much your interest rate impacts your month-to-month bill.

#5. It Sets You Up for Success

When you have trustworthy resources at your fingertips, you’ll feel more confident in your home search process. A mortgage calculator with PMI is the ideal tool to give you the information you need to navigate your mortgage wisely. Knowing how various inputs impact your payment, paired with the advice and information you’ll get from your lender, will set you up for success in your home journey.

Find a Mortgage Calculator with PMI

Never start your home search without understanding your full mortgage responsibilities. Source as much information as you can from local real estate experts and mortgage lenders in your area, so you can make informed decisions. While you’re working toward your loan, be sure to play around with a mortgage calculator to get your financial bearings.
To search properties for sale, be sure to explore our listing site. When you’re ready to speak with a real estate agent, we’ll carefully match you with a local market expert.

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